Return of investment in Vietnam

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Return of investment in Vietnam

The very first question one has to ask to themselves before investing anywhere is what are the returns on investments? Without a return, one would not be interested in investing their money in a business at all. Similarly, when considering investing in a foreign country, the return on investment should be analyzed properly otherwise one might end up losing all of their hard earned money.

In a country like Vietnam, investments may seem like a bad idea. However, that might have been true around 7 to 10 years ago. Currently, Vietnam has a promising economy, with a great working population and a supportive government. All these factors indicate that Vietnam is the next upcoming country in Asia to warrant foreign investments.

As for foreign investors, they should be looking at certain facts which can ensure that investing will guarantee proper returns. The factors mentioned below are some of the indicators of huge returns on investment from the Vietnamese economy.

Better macro fundamentals – Let us talk a bit about statistics for a bit. In the last five years, the macroeconomic condition of Vietnam has seen massive improvements. The foreign reserves in Vietnam have increased to an astounding $34 billion, which is like triple the value it used to be five years ago. The national interest rate has seen a decline from 20% to a mere 8% which is very impressive. That’s not all; the inflation rate went on a slump from 18.7% to staggering 0.6%. For the past five years, there has been a steady economic growth of about 6% to 7% annually. All these numbers just indicate that Vietnam is actually the best place to conduct your business in and get a healthy return on investments.

The potential for Urbanization-As it stands, Vietnam isn’t exactly as developed as the nearby Asian countries such as Thailand, Hong Kong or Singapore. This is mainly due to the fact that over 70% of the total population of Vietnam still lives in the urban areas. However, this is likely to change very soon. One of the key strengths in the rise of China as a super economy was because they experienced heavy urbanization and the people moved away from agricultural work to more manufacturing and tertiary sectors. The same scenario is likely to apply to Vietnam. Once the people start urbanizing, they will gain more income per capita and the economy will boom even further. This means that investing now before the urbanization will set up the foreign investors to reap the benefits very soon.

Impressive Demographics- While China may be the biggest market in the entire Asian region; their demographic is mostly in the latter stages of their lives. Vietnam, on the other hand, is experiencing their golden population structure. Around 70% of their population is of the working age. The average age of the population is just 27 years old. This means there is no shortage of workers in Vietnam. They are qualified with the literacy rate standing at a massive 94%. This means that not only will foreign investors get an ample amount of workers; they will get skilled and educated ones too. On the other hand, the annual wealth has risen by 13.5% over the past ten years. This indicates that people in Vietnam now have more money to spend on their hands. All these points to the same thing, if you are going to invest in Vietnam, then the people living there will buy your goods and services which mean more revenue for your business and more profits as your return on investments.

Lower risk and volatility- The thing about the Vietnamese market is that they do follow the trends and styles of the western countries. However, their economy is such that they haven’t exactly suffered from a saturated market as is the case in most European countries and in North America. This means that investing in Vietnam is almost a risk-free scenario. Not only are they willing to follow the western world business trends and styles but there aren’t many competitors in the market yet. So whatever business it is that foreign investors or companies want to introduce in Vietnam, they are likely to succeed very well and that in return is going to lead to a decent amount of return on investments.

Geographic location-One of the best things about Vietnam is its geographic location. One would even say that it is strategically located in the best way possible. Vietnam’s long coastline is facing towards the South China Sea. This route provides nearly 40% of the region trade done via the sea. Vietnam is also a member of the ASEAN group and has got multiple trade agreements with a lot of countries. All these allow Vietnam to export and trade their products to companies abroad. While the domestic market is improving, the international market is eager to do business with Vietnam. This all means that investing in Vietnam will guarantee returns on the investment and if the businesses are conducted properly, then the revenue generated will be limitless.